MultiChoice Group (MCG or the group) delivered resilent results for the period ended 30 September 2020.

The group added 1.2m 90-day active subscribers year on year (YoY) to close the period ended 30 September 2020 (1H FY21) on 20.1m households and exceeds the 20m subscriber milestone for the first time. This represents growth of 6% YoY, similar to the prior year, as increased consumer demand for video entertainment services and an easing of electricity shortages in southern Africa were offset by rising consumer pressure in many markets. The 90-day subscriber base is split between 11.4m households (57%) in the Rest of Africa and 8.7m (43%) in South Africa.

Revenue increased 2% (-1% organic) to ZAR26.1bn, with subscription revenues of ZAR22.2bn increasing a solid 5% (3% organic) YoY. Top-line momentum was significantly impacted by COVID-19 in the following areas:

  • Advertising revenue declined ZAR0.6bn YoY, mainly due to a lack of sport advertising and a generally softer advertising market as a result of lower economic activity. This has, however, returned to nearly pre-COVID-19 levels in the months of August and September.
  • Commercial subscriptions were ZAR0.3bn lower than the prior period with hotels, restaurants and other commercial customers largely closed during lockdowns. Although business in the hospitality industry has resumed in recent months, it is expected to take some time to fully normalise.

Group trading profit rose 19% to ZAR5.7bn (38% organic), benefitting from a ZAR0.5bn (ZAR1.2bn organic) reduction in losses in the Rest of Africa and a resilient performance in South Africa. The trading profit impact of COVID-19 was largely neutral, as the ZAR0.9bn revenue loss mentioned above was offset by ZAR0.8bn in delayed content costs.

A strong focus on cost reduction allowed for a further ZAR1bn in costs being eliminated from the base during the period. Overall costs decreased 2% compared to the prior period (-9% organic) and resulted in the group maintaining its target of delivering positive operating leverage by keeping the growth rate in costs below that of revenue growth.

The group continued its strategic focus of investing in local content and produced 1 870 additional hours, despite disruptions caused by strict early COVID-19 lockdown measures. As a result, the total local content library is now nearing 59 000 hours. Since the start of the financial year, the group launched nine new channels across sub-Saharan Africa, as well as 13 further channels as part of the Ethiopian relaunch strategy, to keep its customers entertained, informed and educated. In Nigeria, it recently concluded another successful season of Big Brother and South Africa saw the launch of several local productions such as Inconceivable, Gomora and Legacy, the renegotiation of two major international content agreements in South African Rand (ZAR) and the signing of three new co-productions with global content producers.

Core headline earnings, the board's measure of sustainable business performance, was up 41% on the prior period at ZAR2.7bn. The strong earnings growth was attributable to the improvement in trading profit and lower realised foreign exchange losses.

Consolidated free cash flow of ZAR2.1bn was down 13% compared to the prior period. This was mainly due to the end of a contractual agreement on the southern Africa transponder lease whereby an upfront prepayment reduced lease payments for the first 36 months of the lease term, together with current period foreign exchange movements (ZAR0.5bn), as well as an increase in capital expenditure related to a multiyear investment programme to futureproof the group's customer service, billing and data capabilities (ZAR0.4bn).

As one of the largest taxpayers in Africa, the group paid direct cash taxes of ZAR2.0bn, slightly more than the prior year due to higher profitability.

Net interest paid increased to ZAR252m, primarily as a result of the translation of interest on United States Dollar (USD) transponder lease liabilities at a weaker ZAR:USD exchange rate.

The strength of the balance sheet is critically important given the uncertain longer-term economic impact of COVID-19 and potential challenges for certain markets in the Rest of Africa as a result of a lower oil price. Some ZAR9.0bn in net assets, including ZAR7.3bn in cash and cash equivalents, combined with ZAR4.5bn in undrawn facilities, provide ZAR11.8bn in financial flexibility to fund the group's operations. This strong financial position is after ZAR4bn was utilised to settle the MCG and Phuthuma Nathi (PN) dividends in September.

Segmental review

South Africa

The South African business held up well in a tough consumer climate, delivering subscriber growth of 7% YoY or 0.5m subscribers on a 90-day active basis. The impact of COVID-19 and the associated lockdown saw consumers prioritise video services, but a lack of live sport and the inability of commercial subscribers to trade negatively impacted revenue generation.

Revenue declined 3% to ZAR16.5bn due to lower advertising (ZAR0.6bn) and commercial subscriber revenues (ZAR0.3bn). Excluding the YoY movements on the above revenue categories which were impacted by COVID-19, revenue growth would have been positive as healthy subscriber growth in the mass market and the annual price increases were negated by a lower average Premium subscriber base in the absence of live sport. The ongoing shift in subscriber mix towards the mass market, combined with the impact on Premium and commercial subscribers as mentioned, resulted in the monthly average revenue per user (ARPU) declining 5% from ZAR292 to ZAR278.

Trading profit increased 12% to ZAR5.8bn. This higher profitability can be attributed to a doubling down on the group's cost optimisation programme, the non-recurrence of three major sporting events expensed in the comparative prior period, lower operational costs in a COVID-19 environment and a temporary shift in content costs as a result of delays in sporting events.

SuperSport had to contend with no live sport for most of 1H FY21 and nimbly adapted by changing channel line-ups, broadcasting top-quality documentaries and showcasing blockbuster sporting movies to keep subscribers entertained. Highlights for the interim reporting period included renewing the English Premier League and UEFA Champions League rights to the 2024/2025 seasons, enhancing the portfolio with two ESPN channels and launching a refreshed thematic channel line-up to improve content discovery for sport lovers.

Connected video users on the DStv Now and Showmax platforms continue to grow as online consumption increases. During the reporting period Showmax launched Showmax Pro, the group's first standalone online sport offering. Showmax Pro allows subscribers to watch their series, movies, kids and sport content across several devices, while also offering a mobile option at a lower price point. During November, the group launched Netflix on its platform and will be adding another major international subscription video on demand (SVOD) service soon.

On the product front, numerous innovative and customer-centric product launches occurred since the start of the financial year. The Explora Ultra decoder will allow subscribers to seamlessly shift between satellite and online platforms, with all content aggregation occurring centrally via one billing platform. DStv Rewards will leverage the group's supplier relationships to reward customers based on their behaviours, while DStv Communities will allow collective payments to improve active days and retention once implemented.

Rest of Africa

The Rest of Africa business grew the 90-day active subscriber base by 6% YoY or 0.6m subscribers. The macroeconomic environment remained challenging with sharp currency depreciation and ongoing consumer pressure impacting reported results. Much needed rainfall reduced electricity shortages in southern Africa, resulting in a recovery of customers in Zambia and Zimbabwe. However, operations in Zimbabwe remain affected by persistent economic difficulties. As part of its growth strategy, the group relaunched its operations in Ethiopia in September, with a much stronger local offering which includes localised billing, more Amharic content and SuperSport local language commentary.

Revenue of ZAR8.7bn represented 11% growth YoY (6% organic). Subscription revenue grew at a similar rate and contributed ZAR8.0bn. ARPU improved to ZAR118 (1H FY20: ZAR111), supported by the weaker ZAR versus most local currencies as well as inflationary price increases. Currency depreciation impacted results more than in the previous year, mainly due to the material depreciation of the Angolan Kwanza (-70%) and the Zambian Kwacha (-45%).

Trading losses narrowed by 59% (150% organic) or ZAR0.5bn (ZAR1.2bn organic) to ZAR0.3bn. This represents a 7% improvement in the trading margin, driven by a combination of revenue growth, effective cost control, content refunds and lower content costs with football leagues being delayed.

Cash balances of ZAR3.2bn (1H FY20: ZAR1.5bn) held in Nigeria, Angola and Zimbabwe remain exposed to weaker currencies. A large part of the YoY increase can be attributed to renewed liquidity challenges in Nigeria, where the central bank has provided limited USD liquidity to the market.

Technology segment

The technology segment, Irdeto, was impacted by the non-recurrence of USD8m in once-off revenues in the prior period and the deferral of certain project revenues due to COVID-19. It contributed ZAR0.9bn in revenues, a decrease of 1% YoY (-17% organic), with the trading profit margin normalising to 28%.

During the reporting period, Irdeto gained market share in providing digital security services and won 18 new customers across both traditional video entertainment and connected industries. Beijing Hyundai, which now incorporates Irdeto's Keystone security technology into all new models, has already shipped 50 000 new vehicles with this technology into the market. Irdeto is now providing security services to five of the six largest global over the top (OTT) players.

Share transactions

In order to preserve cash reserves, the group transferred 3.6m (with a value of ZAR0.3bn on the date of transfer) of the 10.1m treasury shares repurchased in the prior year, to fund the current year awards under the group restricted stock unit (RSU) share plan (this transfer was between two group companies).

Subsequent events

In order to expand the group's entertainment ecosystem further, it finalised an investment for a 20% shareholding in BetKing, a pan-African sports betting group. The transaction price is made up of an upfront investment of USD81m (ZAR1.3bn), with the potential for a further payment of USD31m (ZAR0.5bn) should certain earn-out targets be met between December 2021 and December 2023. As the group exercises significant influence over BetKing, the business will be equity accounted as an associate from 1 October 2020.

To improve the group cost of capital and reinforce the statement of financial position, an amortising working capital loan of ZAR1.5bn was concluded in November 2020. The loan has a three-year term and bears interest at three-month JIBAR + 1.70%.


No dividend has been declared based on the interim results.


The group's focus for the full year, subject to a stable regulatory environment and potentially adverse consequences of COVID-19, will be to continue scaling its video entertainment platform across the continent, focusing on both traditional broadcasting and streaming services, and increasing its investment in local content.

It will also look to further expand its entertainment ecosystem and revenue prospects by offering new products and services and by pursuing new growth opportunities. At the same time, the group will continue focusing on developing employees and making a meaningful impact on the communities where it operates.

Given the risks associated with a weak macroeconomic and consumer environment, and the potential COVID-19 fallout, the group will be looking to maintain tight cost controls, prioritise cash generation and preserve balance sheet strength.


Mrs RJ Gabriels resigned as interim company secretary on 11 June 2020 with Ms CC Miller appointed as group company secretary on the same date.

Mr MI Patel, the board chair, was recategorised as a non-executive director, with effect from 1 October 2020.

Mr DG Eriksson retired as an independent non-executive director on 11 June 2020.

No other changes have been made to the directorate of the group.

Preparation of the condensed consolidated interim financial statements

The preparation of the condensed consolidated interim financial statements was supervised by the group's chief financial officer, Mr TN Jacobs CA(SA).

The group operates in 50 countries, resulting in significant exposure to foreign exchange volatility. This can have a notable impact on reported revenue and trading profit metrics, particularly in the Rest of Africa where revenues are earned in local currencies while the cost base is largely USD denominated.

Where relevant in this report, amounts and percentages have been adjusted for the effects of foreign currency and acquisitions and disposals to better reflect underlying trends. These adjustments (non-International Financial Reporting Standards (IFRS) performance measures) are quoted in brackets as organic, after the equivalent metrics reported under IFRS. A reconciliation of non-IFRS performance measures (core headline earnings and free cash flow) to the equivalent IFRS metrics is provided in note 12 of these condensed consolidated interim financial statements. These non-IFRS performance measures constitute pro forma financial information in terms of the JSE Limited Listings Requirements.

The group's external auditor has not reviewed or reported on forecasts included in these condensed consolidated interim financial statements. The review report of the group's external auditor is included in the Independent auditor’s report on the summary consolidated financial statements and the assurance report on non-IFRS measures included in the Independent reporting accountant’s assurance report on the compilation of pro forma financial information included in the condensed consolidated interim financial statements . The auditor's report does not necessarily report on all the information contained in these condensed consolidated interim financial statements. Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor's engagement, they should obtain a copy of the auditor's report together with the accompanying financial information from the company's registered office.

On behalf of the board

MI Patel
CP Mawela
Chief executive